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Higher earnings lead to jump in shares in Brian Joffe’s Long4Life

Shares in Brian Joffe’s investment group, Long4Life, reached their best level in seven months on Thursday after the company said annual earnings could rise by nearly a third.

The stock jumped 7% to R4.90 shortly after noon — the best level since September 2018 — after Long4Life said headline earnings per share (HEPS) in the year ended February would increase by between 22% and 32%.

However, the prior financial year comprised only 11 months. The company did not give reasons for the earnings increase.

Since listing in 2017, Long4Life has bought Holdsport’s Sportsmans Warehouse, Outdoor Warehouse and Performance Brands, as well as Sorbet, Inhle Beverages and Chill Beverages.

But deal-flow has slowed over the past year. In August 2018, the group decided not to go ahead with the R3.9bn acquisition of Rage after analysts said the shoe group was overvalued.

Independent analyst Anthony Clark said Long4Life has since “had to resort to share buy-backs”, which could indicate there is a lack of attractively priced, large assets in the market.

“However, the stock still has some attraction, and Long4Life has net cash, so one hopes that Brian Joffe, the vaunted deal-maker, will, in the swansong of his career, take Long4Life back to the highs that it reached after listing,” Clark said.

Joffe said in October 2018 that while the group is looking for more deals, valuations of target companies remain steep. He said at the time there was “no merit” in funding deals with equity because the group was trading at a steep discount to net asset value.

Long4Life’s shares peaked at R7.02 in July 2017, but dipped to R4.21 in December of the same year.

The group said on Thursday it would publish its results on or about May 15.

At about 12.45pm on Thursday, the stock was trading at R4.85, a 5.9% increase on the day.